JOBS
From CNBC: “…with the
economy adding just 69,000 new jobs while the unemployment rate climbed to 8.2
percent…the Bureau of Labor Statistics reported that job creation missed
economist estimates for 158,000 new positions and the jobless rate rose for the
first time in nearly a year…It's painfully obvious the economic recovery in the
U.S. isn't just slowing down, it's pulling up the emergency brake. And, lack of
job creation isn't the only critical concern. Wages/Income is sharply
lower," said Todd Schoenberger, managing principal The BlackBay Group in
New York.” Full story at:
ISM
“(Reuters) - The pace of
growth in U.S. manufacturing slowed modestly in May but a gauge of new orders
rose to its highest in over a year, according to an industry report released on
Friday. The Institute for Supply
Management said its index of national factory activity slipped to 53.5 from
54.8 in April, just missing expectations for 53.9…Despite the softer pace, the
sector still grew for the 34th month in a row…”
Full story at:
QUICK NOTES FROM THE WALL STREET JOURNAL (Print version):
WSJ (1 June 2012) Article titled…“India Economy Shows Sharp
Slowing”
(That says it all.)
WSJ (1 June 2012) Headline, “Asia Strains Under Euro Crisis”
“In China, the ministry of Commerce is blaming
‘worse-than-expected’ economic performance in Europe for disappointing export
data…In Taiwan, manufacturers…report order cuts from brand names like Dell,
Lenova and Nokia.”
MARKET
The S&P 500 fell 2.5% Friday
to 1278.
The S&P 500 fell below
its most recent low of 1295. Market
internals reversed the previously improving trend so today was not a bottom. VIX was already high, but it rose another 11%
to 26.7 today.
SOME THOUGHTS
Over the weekend investors
will consider today’s data. I expect
further selling next week. Looking at
some measures of market statistics, it looks like this correction is just getting
started. As a guess (and it’s just a
guess), John Hussman’s comment “…the scope of our concerns is on the order of
25-35% market losses…” looks like a reasonable estimate. I am assuming that would be measured from the
top at 1419. (Hussman Funds, Weekly Market Commentary for 21 May 2012.) Full commentary at: http://www.hussmanfunds.com/
If John Hussman’s analysis
has correctly pegged the bottom, the range would be in the 925 to 1100 area.
Yesterday’s blog included
a prediction by Albert Edwards that the S&P 500 would fall below 666. Worst case, I don’t see it getting much below
the 800 region just based on chart data.
Refer to my Blog, “Unemployment Claims
Disappoint…Stock Market Crash Coming?” at http://navigatethestockmarket.blogspot.com/2012/04/unemployment-claims-disappointstock.html
I am not predicting 800
soon though - “It’s hard to make predictions, especially about the future”
(Markus Ronner 1918).
We’ll just have to wait to
see how Europe and the U.S. economy play out.
Good news will turn this market around in a hurry. I find it much easier to follow the market (rather
than predict the future) and that’s why I created the NTSM system.
NTSM
The NTSM switched back to
SELL Friday. That’s meaningless at this
point since the important sell signal was 9 May at S&P 500 1358.
MY INVESTED POSITION
I reduced my stock
holdings to 30% (0% in stock in the 401k) at S&P 1358 after the SELL signal
on 9 May 2012. (See the page “How to Use the NTSM System” – the link is on the
right side of this page). I cut my stock
position to 15% on 17 May in order to maintain a 10% gain in a
trading/longer-term position I had in the QQQ.
